The private sector's role in the provision of infrastructure in post-conflict countries: patterns and policy options

Abstract

Countries emerging from war or prolonged periods of civil conflict face a bitter paradox: They urgently need basic infrastructure services, but they lack the adequate public revenues, government capacity and investor interest to provide those services. Although donors often provide significant amounts of aid for reconstruction and rehabilitation, countries struggle in the early years after a conflict to absorb this aid due to a wide range of capacity constraints. The result is often: donor-driven contracts for rehabilitation and emergency operations that are not linked to long term arrangements for service provision; reliance on institutional and legal arrangements for infrastructure provision that were present before the conflict, regardless of their current applicability; postponement of regulatory and structural reform of infrastructure sectors in the face of so many urgent policy initiatives; and the emergence of small-scale, local and diaspora-funded investor-operators offering basic services without the benefits of debt financing, scale economies, official recognition or quality-of-service regulation.

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